Mexico, Canada Committed to NAFTA Deal

MEXICO CITY (Dow Jones) — Mexican and Canadian officials reaffirmed Wednesday their commitment to a trilateral North American Free Trade Agreement, explaining that bilateral meetings between the different members are part of the negotiating process.

“Canada very much believes in NAFTA as a trilateral agreement, and that is simply a statement of the reality,” Canadian Foreign Minister Chrystia Freeland said at a press conference in Mexico City after a meeting with Mexican Foreign Minister Luis Videgaray and Economy Minister Ildefonso Guajardo.

“We are very much committed to modernizing NAFTA as a trilateral agreement,” she added.

Mr. Guajardo, who is Mexico’s chief negotiator in the NAFTA talks, said bilateral meetings such as the one Mexico plans Thursday in Washington have been part of the year-old NAFTA negotiation process. He noted that Ms. Freeland also met recently with U.S. Trade Representative Robert Lighthizer.

“Let’s not get confused,” he said. “It’s clear it’s just a method, and isn’t going in any direction that is not a trilateral agreement.”

The subject of whether NAFTA will continue as a three-member pact followed comments last week by President Donald Trump, who hinted that the U.S. could be close to reaching a deal with Mexico and that two-way talks with Canada could come later.

Mexican officials say they are committed to completing a deal to rework the 24-year trade pact this year if possible. But Mr. Guajardo and Ms. Freeland expressed their continued opposition to a U.S. proposal for a sunset clause under which NAFTA would expire in five years unless explicitly renewed by its members.

Mr. Guajardo said chief executives he has talked to say they could make a great effort to raise regional content in autos and improve labor conditions in the auto industry, as the U.S. has demanded, but require long-term certainty to do it.

“It is a doable effort as long as there is not uncertainty on the horizon,” he said. “You cannot ask the auto industry to design a new business model at the same time you tell them, ‘Look, in five years we may change our minds.'”

Ms. Freeland echoed those views, saying Canada believes a sunset clause “runs counter to the whole idea and purpose of NAFTA and the NAFTA modernization.”

Mr. Videgaray recalled that, in early 2017, there was talk Canada was preparing to “throw Mexico under the bus” on NAFTA and that those rumors were quickly squashed by Ms. Freeland.

The Canadian delegation headed by Ms. Freeland planned to meet later Wednesday with Mexican President-elect Andres Manuel Lopez Obrador, who won July 1 elections and is scheduled to take office Dec. 1.

Mr. Lopez Obrador has expressed support for a renegotiated NAFTA and has approved of the steps taken by the current negotiating team. His designated chief trade negotiator, Jesus Seade, plans to travel to Washington with Mr. Guajardo to participate in this week’s talks.

The inclusion of the transition team in the meetings is a way of presenting a single front on Mexico’s part, Mr. Videgaray said.

Mr. Seade said this week that the incoming administration sees some room for flexibility on certain dispute-settlement mechanisms sought by the U.S., but is also opposed to a sunset clause.